How Do You Calculate Whether You Qualify For A Debt Consolidation Loan

How can I Increase My Qualification Chances?

If you are intent on consolidating a very high interest credit card debt into a debt that will incur you less interest charges, then a debt consolidation loan is the way to go. However, you need to beware, since if you apply for this loan and the lender turns you down, if you apply again with another lender your credit score may end up dropping. If you want to increase your chances of qualifying for a debt consolidation loan, you can use a debt consolidation calculator. It is not a complex and lengthy process.

What’s My Homework?

First of all though, you will have to do ample homework. Make a point of listing down every single debt that you intend on consolidating. It would do you good to be well prepared before you meet with the loan officer. In general, this means that you will have to generate a list that will detail all your monthly payments and all balances that are due for each debt that you have.

Afterwards, you will need to make a monthly budget. This will help you learn the exact amount of money that you are able to afford to make payments on your debt consolidation loan. This should comprise of all of the expenses associated with your day to day life. You can find some amazing and free budget spread sheets online.

What Documents will I Need?

Staying prepared is very important. When you meet your loan officer, make sure that you bring your most recent pay stub together with your previous year’s tax returns to apply for this type of loan. By being fully prepared, you will be demonstrating to your lender that you are a responsible individual thus increasing your chances of being awarded the loan.

What Else?

Next, you have to understand how mathematics works. Most lenders will calculate the total amount of your Gross Debt Service Ratio, also commonly referred to as GDSR, which will help them in determining whether or not you have the ability to pay back the loan.

This involves adding up all of the debt payments that you are liable for at the moment such as car loan repayments and mortgages. They will then add up the amount you will now be paying on accord to your new debt consolidation loan. This amount is divided by your monthly income so as to derive the Gross Debt Service Ratio.

Most lenders will be satisfied by a GDSR of at most 35%. However, if your GDSR is higher you should not despair. Some lenders have been known to go as far as 48% depending on whether the borrower has a sound financial profile. There are a number of debt consolidation calculators in the internet. You can use one to do thorough homework before applying for the debt consolidation loan.

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Debt Consolidation Loans – Financial Freedom Or Folly?

How Did You get into This Situation?

The constantly rising cost of living may sometimes force you to overburden your pocket with lots of loans. Loans are very helpful but if not checked properly, they can turn out to be the worst financial decision you have ever made. They may solve financial issues on the short term, but they will eventually have to be paid back.

Paying back these loans with interest can be an extremely expensive task for you. However, it is a cross that you do not necessarily have to bear. More than one kind of debt may direct you to a hard cycle of unmanageable finances that can be quite difficult to break. In case you find yourself in such a situation, you can take a debt consolidation loan to repay loans that are pending such as educational loans, credit card loans and utility bills.

 What do I Look for?

With this option, you barter you various debts in a single deal referred to as a debt consolidation loan. You need to make sure that the debt consolidation loan will be reducing the cost of repaying your various loans. It is vital for the success of your debt consolidation loan. Debt consolidations for some types of loan such as credit card debts will always prove to be cheap for you. This is because credit card loans have unnecessarily high interest rates that can accrue to a huge amount to pay back. So long as you can find yourself a debt consolidation loan that is cheap, you will reap the full benefits.

Where do I Find the Best Deals?

Some of these benefits include reduction in the amount to be paid on a monthly basis. The interest rates that are charged to the loan will also be reduced a great deal. In addition to this, you can get to repay multiple loans at a go and avoid going bankrupt.

There are a great deal of debt consolidation loan lenders you can find online. So long as you do extensive and persistent research, you will find yourself a lender that will offer you the service at rates that are quite cheap.

However, these loans are usually very subjective. If you see cheap interest rates, that does not necessarily mean that they apply to you. They will depend on the loan term, loan amount and the type of rate of interest that is charged.

 How do I get the Cheapest Rate?

If you want to find a debt consolidation loan at a cheap rate, you need collateralization. This is a form of security that is given to the lender of the loan so that in case you do not pay the loan back, the property may be utilized as a source of finance to fund the repayment of your loan. With collateral, you can find yourself loans that have a cheap rate as they reduce the risk the lender is taking. If you want to find a cheap debt consolidation loan, it would not hurt to have a good credit history. This can be very helpful in convincing the lender that you are someone who can be trusted to pay back the amount in due time. However, this does not mean that you cannot find debt consolidation with bad credit.

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Debt Consolidation Loans-What Do I Need To Know?

What’s the Truth?

Nowadays, taking out a debt consolidation loan may seem to be the best way to eliminate any excessive credit card debts. However, the truth of the matter is that no single person can analyze whether the decision is the right one or the wrong one unless you have the chance to look at the consequences of debt consolidation that may arise over an extensive period of time, both positive and negative.

Generally, debt consolidation loans are low interest loans that are usually offered to consumers who are intent on consolidating all the debts they have into one single debt. Taking out such a loan has many benefits to the borrower especially when it comes to getting rid of excess credit card debt.

What are the Main Benefits?

With multiple debts, consumers tend to become confused especially when it comes to keeping track of the loans and repaying each of these debts. By having a benefits of debt consolidation loan, you will rid yourself of all of the hassle associated with making all these payments each month. Instead, you will only be required to make one payment making your work much easier.

Debt consolidation is also advantageous to the borrower due to the fact that it will as a result lower the amount of monthly payments that you have to make. This is one of the most positive debt consolidation consequences attracting thousands of borrowers. As a result of the reduced rates and longer term for repayment, the amount you will end up repaying will be lower than that you were paying prior to consolidating your loan.

What’s Your Credit Rating Like?

For individuals who have defaulted on their credit card debt payments, credit scores tend to dip. As a result of this, you may even become ineligible to apply for any other kind of loan. In addition to this, bankers have a habit of disliking borrowers who have troubled credit history and will likely charge you very high interest rates in case you are lucky enough to be approved for one. With debt consolidation you can ensure this does not happen.

Debt consolidation loans are very good for a person’s health and state of mind. With such an option, you do not have to worry about having to keep track of your many debts and their payments. The consolidation makes these debts a singular problem that is much easier to handle as compared to a bulk of debts. As thus, you reduce the amount stress you put yourself in a great deal.

What’s the Downside?

However, the consequences of debt consolidation are not all positive. There exist some negative impacts. One of these such effects is the fact that these loans are different from the way they may appear to you. Since the period of repayment is longer, you will end up repaying more than the amount you would have paid before.

In addition to this, this type of debt may change greatly in case the company that is providing you with the loan is taken over by another company. In most cases, these changes are usually not in the favour of the borrower.

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What Are The Main The Benefits Of A Debt Consolidation Loan

How can You De-stress Your Financial Life?

In your lifetime, you may have taken out a number of loans be it a business loan, a car loan, bank overdraft, student loan or credit cards. These loans are usually taken as a result of being faced by unexpected financial difficulties, overspending, illness or any other personal spending purposes. Do you want to get rid of all the hassle that is associated with dealing with these creditors of yours? You could always try out debt consolidated loans. By consolidating all of your debts using a debt consolidation loan, you will be aiding in the good management of your debts. Taking a debt consolidation loan makes the borrower liable to only one lender, that is the person who is offering the loan itself.

It can be quite relieving to take out such a loan. It will help reduce the kind of stress that the borrower is exposed to. Sometimes, it may be quite hard for a borrower to keep track of all payments he or she is making or has made to different creditors. It can also be difficult to track when these payments are due and whether they will have enough cash to cover these payments. If you are not careful, you may end up missing payments and incurring late fees.

What are the Best Choices?

A borrower may choose to take either an unsecured debt consolidation loan or a secured one. A secured debt consolidation loan has been secured by property owned by the borrower for instance a house, a car, a savings account or bonds. In this case, lenders tend to charge a very low rate of interest since the loan has been secured against the property and so it is less likely that the borrower will default payments.

An unsecured debt consolidation loan on the other hand has not been secured against a property owned by the borrower. As thus, it will carry a higher rate of interest as compared to secured debt consolidation loans. When taking out an unsecured debt consolidated loan, the borrower is usually on the safer side. This is because his property is not at risk in case of defaulted payments. If you are a tenant and have no vehicle, you may have to pick out such a loan.

How Much can I Save?

These kinds of loans can be very helpful in reducing the amount of monthly payments that you have to make. If you can reduce your monthly payments, you can improve your cash flow and get a better grip on your living conditions. The borrower, may easily make small payments from his income source that will not greatly deplete his or her pocket.

This can be very helpful in saving money each month which had otherwise been dedicated to paying back the loans in terms of costly interest rates. It will also save you lots of time in the long run since you do not have to deal with a variety of lenders, only just the one.

What can Go Wrong?

Even though debt consolidation loans are quite beneficial, they will not help you if you do not take advantage of the chance you are giving yourself. The key to success with these loans is discipline. Do not overspend with credit just because you have consolidated your loans. If you are unable to control your spending habits, even with debt consolidation, you will end up in debt that is deeper than you were in before.


Debt Consolidation Loans-What Do I Need To Know

Debt Consolidation Loans – Financial Freedom Or Folly

How Do You Calculate Whether You Qualify For A Debt Consolidation Loan

Read More